Focus Media Says SEC Probes Possible Securities Violation

By Linda Sandler -
Jan 24, 2013

Focus Media Holding Ltd. (FMCN) said the
U.S. Securities and Exchange Commission is probing potential
“violations” of securities law, with special attention to
purchases and resales of companies including Allyes Online Media
Holding.

The Shanghai-based advertising company is cooperating with
the SEC, it said in a regulatory filing on Jan. 18 about its
going-private transaction with Carlyle Group LP (CG) and other firms.

“On March 14, 2012, the SEC informed the company that it
was initiating a non-public investigation into whether there had
been any violations of the federal securities laws,” it said in
the Jan. 18 filing. “The SEC advised the company that the
existence of the investigation should not be construed as an
indication by the SEC or its staff that the company or any of
its officers or directors had violated any of the federal
securities laws,” it said.

Focus Media fell 2.7 percent to $25.09 at 12:25 p.m. New
York time in Nasdaq Stock Market trading.

The Allyes deal, involving the resale of an acquisition of
the Internet ad company back to the original owners, was one of
a series queried in 2010 by the SEC in letters to the company.
The regulator noted in its letters, published later on its
website, an “apparent pattern” and asked for explanations.

Later, short-seller Muddy Waters LLC published a report
that also criticized the deals.

Focus Media agreed in December to be bought by a group of
investors led by Carlyle Group in a $3.7 billion deal that will
be China’s largest leveraged buyout.